John Lewis Partnership to cut 1,000 jobs; UK inflation jumps – as it happened

Graeme Wearden

from on 2021-07-14 15:13 (#5M5VN)

Rolling coverage of the latest economic and financial news

Latest: John Lewis Partnership proposes 1,000 redundancies
Retailer simplifying management structures
Barratt expects profit of more than 800m amid housing market boom

Earlier:

UK house price inflation rises to 10%
Introduction: UK inflation at near three-year high of 2.5 in June
ONS: price rises widespread, but some temporary factors
Used car prices jump amid chip shortage
Motor fuel prices up 20% in last year - fastest in a decade

4.04pm BST

The owner of John Lewis and Waitrose is planning to cut 1,000 jobs in stores as part of an effort to cut costs, my colleague Sarah Butler reports.

The John Lewis Partnership (JLP) said it would aim to find new jobs for those losing their store management roles and would aim to reduce compulsory job cuts by offering voluntary redundancy to those affected.

We have announced to our [staff] our intention to simplify our management structures in Waitrose and John Lewis stores, which will allow us to reinvest in what matters most to our customers."

John Lewis and Waitrose owner to cut 1,000 jobs in stores https://t.co/ww1ErmnBEl

4.01pm BST

The City had a royal guest today: Prince Charles paid a visit to Goldman Sachs' London HQ, a day after the bank posted bumper profits.

The Prince of Wales today visited @GoldmanSachs.

Founded in 1869, the company delivers a broad range of financial services across investment banking, securities, investment management and consumer banking to a large and diversified client base. pic.twitter.com/1ZgCm5wBa1

In late 2019, @GoldmanSachs completed the migration of its European headquarters to
Plumtree Court in London - bringing 6,500 colleagues together under one roof.

HRH says hello to some of the company's summer interns in the Lobby! pic.twitter.com/Xgf7GBkV0S

The sustainability features built into @GoldmanSachs' new HQ result in a 25% reduction in annual CO2 emissions.

His Royal Highness hears about the firm's leading role in sustainable finance. pic.twitter.com/8Hfl31yTMh

Up on @GoldmanSachs' stunning Roof Garden, His Royal Highness unveils a plaque to commemorate the visit. pic.twitter.com/xzAxTxXgu0

3.37pm BST

More central bank news. Over in Toronto, the Bank of Canada has its key overnight interest rate at a record low of 0.25%, and warned that new variants of Covid-19 are a growing concern.

In a statement, the central bank said it remained committed to keeping the interest rate unchanged until economic slack was absorbed, probably some time in the second half of 2022.

The global economy is recovering strongly from the Covid-19 pandemic, with continued progress on vaccinations, particularly in advanced economies.

However, the recovery is still highly uneven and remains dependent on the course of the virus. The recent spread of new Covid-19 variants is a growing concern, especially for regions where vaccinations rates remain low.

"The Governing Council judges that the Canadian economy still has considerable excess capacity."

BoC holds rate at 0.25%.
https://t.co/nSNoXQTDAs

This adjustment reflects continued progress towards recovery and the Bank's increased confidence in the strength of the Canadian economic outlook.

The Bank of Canada kept its benchmark at 0.25% but reduced its weekly stimulus purchases (tapered) by another C$1 bln per week. I don't know if RBNZ or BOC is the most hawkish of the major central banks

3.16pm BST

In another sign of inflation pressures, the prices charged by US producers rose in June by more than expected.

The producer price index for final demand increased 1% from the prior month and 7.3% from June of last year, Labor Department data showed.

US PPI +7.3% YoY, highest since Nov '10 pic.twitter.com/iskqf0V78B

BREAKING! Another big #inflation beat! US Producer Prices rose 7.3% in June, against 6.7% expected. Core #PPI rose 5.6%, a full 0.5% more than expected. pic.twitter.com/RUyRc8j2rE

U.S. producer prices rose more than forecast in June, indicating pressure is mounting to pass along higher costs to consumers https://t.co/EjynDAwayn

3.00pm BST

The proposed 1,000 redundancies at Waitrose and John Lewis are driven, like so many layoffs recently, by the impact of Covid-19 on shopping habits.

So explains Sean Moran, a restructuring and insolvency partner at the law firm Shakespeare Martineau:

There is no denying that the pandemic was, and continues to be, a catalyst for drastically altering shopper habits, and many flagship brands are reacting accordingly.

The John Lewis Partnership's decision to simplify management structures, focus on customer service and invest in its existing store portfolio is more evidence of this. Whilst this might be welcome relief for their finances, it's unfortunate news for the individuals affected.

2.44pm BST

Meanwhile in the financial markets, America's S&P 500 share index has hit a new record high in early trading.

The rally comes as the US central bank chief, Jerome Powell, told Congress that this year's surge in inflation would be temporary.

Inflation has increased notably and will likely remain elevated in coming months before moderating,"

S&P 500 rises to a record as Fed stays the the course with easy policy, Apple hits all-time highhttps://t.co/U2xfBOEy1O

Fed's Powell says economy 'a ways off' from bond taper, inflation to ease https://t.co/XeUwMWdWZg pic.twitter.com/9hDbJfCb2e

2.36pm BST

These redundancies will reduce the number of layers between its most senior leaders and non-management shop-floor staff, John Lewis Partnership says.

Earlier this month, it emerged that the company has been considering building thousands of homes - from studio flats to four-bedroom houses - on its land.

2.14pm BST

Kevin Mountford, a co-founder of the savings provider Raisin UK, has fired over some advice for those facing redundancy at John Lewis, or elsewhere ...

2.07pm BST

The proposed redundancies work out at around 2.7 management roles per store (across 331 Waitroses and 34 John Lewis stores).

John Lewis Partnership says it will try to find new roles for affected employees who want to stay in the business and try to minimise compulsory redundancies, Reuters adds.

1.50pm BST

The owner of John Lewis and Waitrose is proposing to cut around 1,000 jobs in a store management shake-up, in another blow to the UK's retail sector workforce.

Parent company John Lewis Partnership says the proposed 1,000 redundancies would fall across its Waitrose supermarkets and John Lewis department stores, as it simplifies its management structures.

It comes after a raft of recent job cuts, which included the closure of eight John Lewis stores earlier this year, in a bid to secure 300m in savings by 2023.

A John Lewis Partnership spokesperson said: We have announced to our partners our intention to simplify our management structures in Waitrose and John Lewis stores, which will allow us to reinvest in what matters most to our customers."

#Breaking Department store giant John Lewis and sister business Waitrose plan to cut around 1,000 jobs in stores, its parent company has confirmed

Department store group John Lewis and sister business Waitrose have proposed 1,000 redundancies in stores, Retail Week can reveal.

Parent John Lewis Partnership informed partners of the plan on Wednesday morning, and said that the changes would make the business more competitive and enable it to better serve shoppers.

The John Lewis Partnership has unveiled plans to make up to 1000 job cuts at its Waitrose and John Lewis stores in a bid to simplify management structures https://t.co/vY8QgKYudx #retail #retailnews

John Lewis and Waitrose latest to overhaul store management, cutting out middle-manager roles in favour of customer-facing ones. Around 1,000 jobs to go, says @RetailWeek

This is of course a tiny % of their 78,000-odd partners but shows no-one's immune to the need to cut costs

1.10pm BST

There are reports that the standoff between the United Arab Emirates and the rest of the Opec+ group has been resolved, breaking the deadlock over the group's output plans.

Under the agreement, the UEA would be given a higher output quota under the existing production cuts deal, allowing it to pump more.

Saudi Arabia and the United Arab Emirates have reached a compromise over OPEC+ oil policy, giving the UAE a higher production baseline and paving the way for extending a pact on remaining supply curbs to the end of 2022, an OPEC+ source said on Wednesday.

The UAE's baseline, the level from which cuts under the OPEC+ agreement on supply curbs are calculated, will be 3.65 million barrels per day from April 2022, the date when the existing pact had been due to expire, the source said.

Saudi Arabia, UAE reach compromise oil output deal - OPEC+ source https://t.co/G8UtElTwxQ pic.twitter.com/XSyZ4InJSg

#KSA and the #UAE reached a compromise on OPEC+

Economic competition is a very real part of the Saudi-UAE relationship but this shows that it won't come at the cost of the broader alliance.

News this morning is they've reached a compromise and the UAE will stick with OPEC+ at least thru end-2022. Quitting outright comes with its own risks. Plus, there's a case to be made that OPEC+ will be more influential years from now.

Breaking: #Oil price trades extra volatile after #KSA & the #UAE reached a compromise on an oil production agreement - #OPEC+ source.

As per the latest update, "UAE will have a higher oil production baseline at 3.65M barrels per day for future oil deals,"#opecmeeting #opecplus pic.twitter.com/ukquduMG2D

12.56pm BST

It's been a subdued morning in the European stock markets, with worries about inflation and the strength of the global recovery weighing on shares.

The FTSE 100 index of blue-chip shares is down 32 points, or 0.45%, at 7092 points. Mining stocks and banks are among the risers, with Glencore up 1.5% and Lloyds gaining 1%.

Shares slid slightly lower after the opening bell on Wednesday, driven down by travel and leisure stocks as Delta variant worries continue to weigh on market sentiment.

Most benchmarks are now testing their short-term major support levels, in a pull-back move, after this morning's slew of solid inflation data from Spain and Sweden following yesterday's spike in US data.

12.55pm BST

Inflation in Spain remained over target at 2.7% in June (or 2.5% on a eurozone-harmonised basis, up from 2.4%)....

Relatively high inflation in Spain compared to other EZ countries.
#macrobond pic.twitter.com/1AC8jPQ1A5

Spain Harmonised Annual Inflation Final at 2.5% https://t.co/JscH3n3QT6 pic.twitter.com/poqeUnlVCb

Meanwhile #Sweden continues to be the outlier of the pandemic, with its #inflation print actually FALLING in June thanks to weaker price growth in package holidays and comms.

I remain sanguine about global inflationary pressures.

12.27pm BST

Barratt Developments, Britain's biggest housebuilder, has forecast it will make more than 800m in annual pre-tax profits, as it benefits from the housing market boom and buyers' rush to complete purchases before the end of the stamp duty holiday.

12.23pm BST

Over in the eurozone, factory output has dropped by more than expected, raising questions over the strength of the recovery.

Seasonally adjusted industrial production fell by 1.0% in the euro area in May, and by 0.9% in the EU, date from eurostat shows.

Euro area #IndustrialProduction -1.0% in May over April 2021, +20.5% over May 2020 https://t.co/W3gC1YT40g pic.twitter.com/3C7UDicMUs

After eurozone industrial production growth exceeded expectations on the upside in April, today's figures for May came in gloomier than expected.

Whilst the continued easing of restrictions in the euro area is contributing to a recovery on the demand-side, industrial shortages are creating turbulence. Cebr expects 5.0% eurozone GDP growth this year." -

12.08pm BST

The homeware chain Dunelm has benefited from the reopening of its stores in the past three months, with sales up 44% on pre-pandemic levels as the home improvement boom continued.

Dunelm reported strong pent-up demand for homewares from customers who wanted to shop in person in its reopened stores for home furnishings including bedding, curtains, bathroom textiles, cushions, dining furniture and decorative accessories.

12.05pm BST

Rents are also lagging in London, the ONS reports:

11.43am BST

Here's some reaction to the 10% jump in UK house prices in the year to May.

Tom Bill, Head of UK Residential Research at Knight Frank:

Despite house price growth reaching double-digits, the second half of the year is unlikely to bear much resemblance to the first half for the UK housing market. We expect growth to fall to mid-single digits as tax breaks wind down and supply picks up. Comparisons with the global financial crisis are misleading given how low interest rates remain and the fact the mortgage market acts as more of a brake and less of a lubricant for housing market activity than it did in 2007.

House prices were driven higher by a supply squeeze as the UK came out of the pandemic, an effect seen in other sectors of the economy. If you add in a stamp duty holiday and the fact pent-up demand had been building for five years against the uncertain backdrop of Brexit, the result was a burst of house price inflation. In what may be a sign of things to come in the UK, housing market activity is now beginning to moderate in North American markets as the distortive effects of the pandemic recede."

House price growth has returned to form, bouncing back from the one-off fall in April, and we expect a further rise next month as the full impact of the stamp duty holiday extension emerges.

Even with the biggest tax savings now behind us, there are no indications prices are going to slip back to where they were before the pandemic.

Commenting on house price data for May, ONS Head of Economic Statistics Sam Beckett said: (1/2) pic.twitter.com/DaM509nYvJ

Sam Beckett continued: (2/2) pic.twitter.com/rkPCefLc5Y

Such rapid price growth cannot continue forever, and this data may well have captured the high-water mark of price inflation.

With the Stamp Duty holiday now ended in Wales and Scotland, and tapering away in England and Northern Ireland, the temporary stimulus it provided is fading fast.

The latest UK HPI figures reflect sales that completed in May when buyers were still enjoying the full Stamp Duty holiday. At that time, the atmosphere was frenzied as buyers sprinted to complete sales before the end of June.

Price growth has cooled a little since the deadline has passed, but the cliff-edge scenario many were predicting hasn't played out. Prices haven't collapsed, very few transactions have fallen through and we are seeing a healthy level of new instructions.

10.35am BST

House price inflation sped up again in May, with prices jumping by 10% over the last year.

The latest Land Registry figures show that the average UK house prices increased by 10.0% over the year to May 2021, up from 9.6% in April 2021, with London continuing to lag behind.

The cause and effect of the #stampdutyholiday UK average house prices peaked in March but increased by 10.0% over the year to May 2021, up from 9.6% in April 2021. @ONS pic.twitter.com/Njh3OrUAws

The appetite for larger homes continues unabated with the price of detached homes growing by 11.3% compared to 6.5% for flats over the same period. Demand is strongest in areas of better affordability - namely the northern areas, where the average house price is significantly less than the UK average of 254,624. With the stamp duty holiday now reduced to the lower threshold of 250,000 until the end of September, we can still expect to see a healthy level of demand in these areas.

Even once the tax break is removed in autumn, we do not anticipate activity and price growth to slow in response. Demand still exceeds supply, with fewer homes from existing stock coming up for sale and new builds still low, low borrowing costs and buyers still re-evaluating their housing needs should all support prices. And importantly households in aggregate have built up large stock of excess savings since the first lockdown, which could continue to fuel demand."

9.39am BST

Britain's inflation rate has risen to 2.5% - its highest level in almost three years - after the easing of coronavirus lockdown restrictions prompted rising demand.

The Office for National Statistics (ONS) said dearer food, secondhand cars, clothing and footwear and fuel prices were the main factors behind a jump in the annual inflation rate from 2.1% to 2.5% in June.

9.38am BST

UK inflation will climb to around 4% by the end of this year, predicts Paul Dales of Capital Economics.

But, he also predicts this will be a short-lived spike, and that inflation will fall back in 2022 as the impact of rising commodity prices and shortages fades. So, the Bank of England won't tighten policy anytime soon.

But the rises are bigger than the base arithmetic would suggest, which means that genuine price inflation is happening too.

9.28am BST

Economic research group NIESR predicts that UK inflation could peak in March 2022.

Here's their take on the rise in inflation:

Annual headline inflation rose to 2.5% in June from 2.1% in May. The month-on-month increase in consumer prices was again quite high in June with 0.5%, following 0.6% recorded in each of March and April. Our measure of underlying inflation, which excludes extreme price

1/5

movements, increased to 1.6% in June from 1.2% in May, reflecting price pressures from several transitory factors such as the effects of opening-up and higher transport costs. Higher input prices and supply constraints in some sectors will continue to put an upward

2/5

pressure on headline inflation in the short-term. Furthermore, the #VAT cuts, which were aimed at supporting the hospitality, hotel and holiday sectors last year, are scheduled to be reversed in September 2021 and March 2022. Depending on the level of pass-through,

3/5

these could also contribute to higher headline inflation and lead to a peak in annual consumer price inflation around March 2022. The peak in inflation and its persistence will be crucially determined by how the reported shortages in intermediate inputs and labour

4/5

will interact with the recovery in aggregate demand on the back of the easing in #COVID19 #restrictions

Watch this page as our full analysis will be out shortly
https://t.co/oazGwBI9PW

9.15am BST

The inflationary pressures on UK manufacturers have eased slightly.

Inflation at the factory gate slowed in June, with output prices rising by 4.3% year-on-year, down from 4.4% in May, the Office for National Statistics reports.

Supply chain price pressures moderated a little - input prices growth stood at 9.1% on the year to June 2021, down from 10.7% in May-21

Rate of output inflation for goods leaving the factory gate at 4.3% on the year to June 2021 (down from 4.4% in May-21) pic.twitter.com/AkKeIAmZf6

This morning's UK data has a few signs that the big base effects through the commodity channel are beginning to ease with PPI growth softening. In US the path back to 2% will take longer as demand-side surge is likely to be more pronounced, given huge US disposable income boost pic.twitter.com/hBG6mvsndr

9.02am BST

Garment prices rose by 3.8% year-on-year in June, driven by a broad range of women's clothing".

Women's clothes were 4.3% pricier than a year ago, while men's clothing was up 3% - partly due to replica football kit:

Prices overall rose this year by more than a year ago, with the main upward contributions coming from women's jeans, formal trousers, cardigans, short sleeve/sleeveless formal tops, casual jackets and vests/strappy tops, and men's official football shirts.

8.58am BST

UK inflation surprised to the upside this morning headline up 2.5%, core up 2.3%. When we get strong numbers like that, it's worth looking at the distribution of the components (whether headline is distorted by a few big readings). Here we see a sharp move higher in the median! pic.twitter.com/tIkCTmP45n

8.37am BST

The pound has risen a little since the inflation data was released.

It's up a third of a cent against the US dollar at $1.385, as traders ponder how much pressure it puts on the Bank of England to consider easing back on its stimulus package.

The upside surprise in the UK's CPI reading could question the BOE's view that inflation is transitory as the consumer price gauge recorded its second beat in two consecutive months.

The data has provided sterling with an immediate boost against the dollar, as it provides evidence inflation is running hot on both sides of the Atlantic and the BOE is subsequently under the same pressures as the FED to monitor price rises and potentially tighten their grip on monetary policy"

8.20am BST

Inflation is likely to keep rising through the second half of this year, predicts Martin Beck, senior economic advisor to the EY ITEM Club.

CPI inflation continued to accelerate in June, reaching a 34-month high of 2.5%. Around half of the pickup between May and June was due to higher petrol and food prices, the latter being largely a function of base effects after a soft reading last June.

There was also a significant contribution from restaurants and hotels, which the ONS warns is partly a reflection of these venues being closed a year ago. And there was no evidence of a reversal of last month's price increases in the clothing or recreation and culture categories.

Much of the impact of a stronger pound is still to pass through to consumer prices, the large amount of spare capacity will weigh on wage growth and margins, and inflation expectations remain well anchored.

The institutions and labour and product markets which facilitated high inflation in the past are also lacking."

8.13am BST

Hannah Audino, economist at PwC, says several factors pushed up inflation, including:

Inflation is unlikely to follow a smooth path this year, with different factors feeding irregularly into the monthly data.

In general, inflation is expected to follow an upwards trend as the economy reopens, allowing consumers to unleash some of their estimated 180bn of excess savings. We might see businesses raising prices in order to recoup lost revenues and also in response to rising input costs such as freight and raw materials".

8.07am BST

Secondhand car prices jumped by 4.4% in June alone.

This is partly due to the shortages of semiconductors which has hit the car industry. With fewer new vehicles rolling off the production lines, people are turning to the used market instead.

Inflation rate up again a bit, a little further above 2% target, driven by, for example, used car sales prices up 4.4% in June alone, which we covered last month.

Base effects, eg comparisons with pandemic price falls a year ago, driving a lot of this... https://t.co/fHFGZyQn5i

used car price surge is also a result of pandemic, eventually. Demand has shot up, because new car production slowed at a time when demand rebounded, forcing people to buy second hand. microchip production was diverted away from new cars to electronics last year during pandemic

7.55am BST

Here are some of the notable price rises which pushed UK inflation up last month.

I always prefer to look at UK CPI on a services & goods basis. Goods are volatile, service inflation is the thing to watch. pic.twitter.com/pV9Q8zG6th

7.46am BST

Jonathan Athow, the UK's deputy national statistician, says June's rise in inflation was widespread':

Commenting on today's figures, ONS Deputy National Statistician for Economic Statistics Jonathan Athow said: (1/3) pic.twitter.com/Q3n3BE3VCr

. @jathers_ONS continued: (2/3) pic.twitter.com/wSOyyPNTrV

. @jathers_ONS added (3/3) pic.twitter.com/IVdsUpB3mG

7.37am BST

7.32am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Inflation across the UK has risen to its highest level in almost three years, as the cost of fuel, food, secondhand cars, clothing and footwear rose.

UK annual inflation measured on the consumer price index (cpi) hits 2.5% in June @BBCr4today #R4today

UK inflation shoots higher in June, climbing to 2.5% year on year, up from 2.1% in May and above the analysts' expectations of 2.2%. Watch out for $GBP pic.twitter.com/Sd4w1ri5b4

Average petrol prices stood at 129.7 pence per litre in June 2021, compared with 106.5 pence per litre a year earlier. The June 2021 price is the highest recorded since October 2018.

In comparison, the UK was in the first national lockdown at this point last year and petrol prices were affected by reduced demand, reaching their lowest price in May 2020 for over four years

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